Thursday, March 7, 2013

Retired Recently? -Best investment option for Retired Person

Best investment option for Retired Person

There are broadly 2 kinds of retirees viz 1. Those who draw pension from their employers 2. Those who dont have any pension from Employers . Now lets look at how each one of them should approach their investments for post retirement phase.
1. Retired Persons having Pension from Employers
 Since they already have some kind of pension income coming in they are better placed and have less daunting task to plan for this phase of their life.  They need to do following things :
1. Buy a comprehensive Health Insurance Plan - There are lot of general insurance companies in India who are offering health covers upto 65-70 years . There are few options from Life Insurance Companies where one can have the health plan before 70 years and then can continue to renew it for their lifetime. Example is Health Assure Plan for HDFC Life. It is an absolute must that you cover yourself adequately against any untoward health shocks at this stage, since one such shock can wipe out your entire savings.

2. Invest in Senior Citizens Savings Scheme -  At the time of retirement if you have received any lumpsum amount, then, invest teh same in Senior Citizen Savings Scheme. Its Govt of India Scheme meant for providing attractive returns to retired people. One can invest upto maximum Rs 15 lakhs and get 9% returns payable quarterly on it.

3. Invest in Debt/Balanced Fund - Balance surplus investible amount may be invested in good debt or balanced mutual funds . This will ensure it gives better than FD returns with minimum risk. You may consider HDFC Prudence in this category.

2. Retired Persons having  No Pension from Employers

This set of people need to be very meticulous in planning their investments. They need to plan to ensure that they get regular monthly income but also guard against inflation. They must do the following things:-
1. Buy a comprehensive Health Insurance Plan - They too are equally exposed to all the health risks and as such need to cover themselves adequately. Buy cover for both yourself and your spouse.

2. Invest in Senior Citizens Savings Scheme -  Invest upto Rs 15 lakhs in this scheme . This will give them 9% pa.

3. Invest in Post office Monthly Scheme - This will ensure that they get decent returns monthly which will help them keep their basic household expenses going.

4. Invest in good Balanced or Well diversified Equity Fund - Since they do not get any inflation adjusted pension income from their employers , they have to ensure that they invest their money in instruments which gives them superior inflation adjusted returns. I would suggest they can invest in good balanced fund or well diversified  large cap equity funds  like Reliance top 200 , BNP ParibasEquity, HDFC Equity etc.

If you stick to this , I think you will have a comfortable retired life without worrying for paying your next electricity bill .
What do you think? Pl comment.

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